How Can Advertisers Win the Massive Gamer Market?

Gary C. Bizzo  |

Do you have a twenty-something son at home? Does he have a great job, and after work comes home, has dinner then locks himself in his room till the wee hours? It could be anti-social behavior, or he could be a ‘gamer’. A gamer is someone who plays interactive video games and, believe me, there are a lot of both gamers and games out there.

The keyword here is interactive. Back in my day (remember Tetris?), playing a video game was a loner thing in an arcade or at home, but today, interactive games allow players to find competitors from anywhere, at any skill set. E-sports is the word for competitive gaming... and the stakes are high.

My son is 28 years old; the average age of a video game player in the US is 35, with women comprising about 41% according to Entertainment Software Association. The Bartle taxonomy of gamers identified four types of gamers: achievers, explorers, socializers and killers. I think they are all self-explanatory. Suffice to say, they are an engaging, vibrant, super-competitive community, and they are very serious about their games. A colleague of my wife actually takes two weeks vacation when the new games come out in November so he can be the first to buy and play them.

Gaming is serious business! When the Staples Center (SPLS) in Los Angeles sells out its 21,000 seats to gamers who want to watch a video game between two world-class gamers, that is a powerful statement. It even rivals an NHL playoff game.

Some gamer stats (Nielsen):

My sons tells me that it’s annoying when he plays games like Witcher3, Grand Theft Auto 4, Fallout or Halo and gets ads popping up every few seconds. It disrupts the flow! What if there is a better way?

Enter Versus Systems dynamic prizing system. These guys know that the gamers are engaging in totally immersive games and hate the ads so they have developed a reward system for gamers be it downloads, actual cash or products for reaching milestones on a game. Downloadable content is a big thing. It’s inexpensive for the publisher to provide special abilities to the player but is a game changer for the gamer.

White-labeling this concept seamlessly provides any game publisher the ability to connect their advertising to a different side of the target market directly so everyone wins.

Versus is a Canadian company with the head office in LA because as CEO, Matthew Pierce says, “LA is the entertainment capital of the world”. Pierce says that because of the characteristics of the immersive gamers – their super competitiveness and drive, Versus knew that if they could attach emotional resonance coupled with a goal of achievement to allow gamers to win prizes they had a winning product. It’s a win/win situation for the gamer, publisher and advertiser. The gamer can win stuff, the advertisers can learn a lot from their customers (demographics) and the publishers get more engagement (money).

With plans for Versus to add geographical algorithms to the rewards, once the gamer reaches a milestone, he could win a pizza from the shop down the street and have it delivered to his home while he is still playing the game. This contextual advertising can offer prizes in the gamer’s jurisdiction that is legal and unlocks the local aspect of the market to the advertiser.

Founder Pierce laughed when he told me that at one point early on in the development of their software “there were more lawyers working on gaming compliance than there were programmers”. Versus’ story is interesting because Pierce started off running an incubator called OLabs in Los Angeles. They joint–ventured with Originate, a product and software development company, and Manatt Phelps & Phillips, a nationwide law firm with expertise in gaming, gambling, sweepstakes, and digital media law.

They knew they wanted to be in the entertainment industry and were on the lookout for a company that could use their expertise in that area. The first company that went through the incubator was Versus.

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Pierce took one look at the company and knew that with its’ disruptive technology, great team and innovative product, he wanted to lead it into , quite literally, a game changing scenario. With the proprietary innovation of “Dynamic Regulatory Compliance, developers and publishers can focus on what they do best: creating the best possible game experience for the people that love their games. Our system addresses player verification, as well as the ever-changing regulations around prizing eligibility and distribution, taking that burden off the shoulders of publishers and developers.”

Game publishers have tried to capture this advertising market with financial rewards, but keep ending up with the top 1.00% of their customers. Sure, people love watching them, but they still have to go back to their ad-based games at the end of the day. Versus wants to capture the other 99% of this market, people like my son who might want to challenge a few friends to an interactive game for a couple bucks, win some cool stuff and hang out on a Friday night.

What is Versus Systems market? Pierce says they want to be integrated into any game on mobile, console or PC but their sweet spot is PC games with first person shooters, capture the flag based or sports and fight games. Any game with levels works so when you reach the next tier you get a reward. The idea that at every level you get a reward has to work better than one that doesn’t offer incentives – improving engagement by providing stakes will make more people engage.

So the publisher finds that the energy drink reward isn’t exciting people enough as a reward? Versus can quickly change the rewards to concert tickets based on geography.

Candy Crush Saga is a game skewed to women. It was bought last year by King Games for $6B yet it is a free puzzle-based game. However, gamers can buy ‘shortcuts’ to next levels and other merchandise that amounts to billions. Prizes really matter to people. Versus is banking that prize-based gaming will be as big as multi-player immersive games.

Versus Systems raised over $5MM in the past year mainly from private individuals. It recently secured bridge financing to take it through beta, launch in the summer and to market penetration in the fall of 2017. Currently trading at 22 cents, the company is looking more for market participation than they are for money. If their milestones and projections on this system are correct they will be looking at big players to acquire them - sooner than later.

Versus Systems is the first company that has put it all together for the advertiser, gamer and the publisher. It’s publicly traded on the CSE:VS.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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